The New Deal

The greatest achievement of early modern economic growth was not the Industrial Revolution itself, but the way in which the leading Western economies began to move away from highly parochial, narrow networks of personal exchange and came to rest instead on increasingly complex national and international commercial networks of impersonal exchange.

Money, an item not necessarily intrinsically desirable or usable but serving as a stand-in for the complex wants and valuations of untold individuals, is an unnatural idea that required centuries to take hold. How much more difficult to grasp was a system of international finance founded upon even more complex forms of exchange?

The common man did not worry about such high and mighty notions. But to the extent that he moved from trusting the corner grocer to relying on national suppliers, or from worrying about the trustworthiness of individual bankers to trusting a currency or banking system backed by a larger, more diffuse international system (itself held together by gold and by the faith that governments and bankers managed that relationship properly), he served as a brick in the edifice of a new concept of political economy.

The Great Depression led to a loss in this social trust that institutions could be counted on and left to their own devices. Article here.


Filed under: Enterprise & Economies, HISTORY

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